01 Jan 2015
Words
Carla Cook
Top end target for accommodation investment
TOP end accommodation property is in hot demand from investors and operators, according to a specialist national broker who has just made three quick-fire sales in Darwin.
“In all cases, we were inundated with enquiry and the first people to contact us went on to buy,” said Trudy Crooks, national sales manager at Resort Brokers Australia.
“We could have another dozen properties like these and sell them all.”
Sold were the 52-room Poinciana Inn CBD motel leasehold, the management rights to 4-star Marrakai Apartments also in the city, and the Vitina Studio Motel business in Gardens Road.
Ms Crooks said Darwin’s strong growth outlook, acknowledged hotel room shortage, and high returns on investment compared to other major cities were behind its strong appeal for accommodation business and property buyers.
“The government’s major focus on Darwin as the capital of Northern Australia in the ‘Asian Century’ and the economic impetus contributed by huge resources projects are attracting a lot of attention in our industry, and there are still excellent opportunities to be had.”
Troy Gay’s family business, based on Queensland’s Gold Coast, bought two of the properties through Resort Brokers – the Poinciana Inn in Mitchell Street, soon to be rebadged Darwin Citypoint, and the luxury Marrakai Apartments in Smith Street.
Sale prices have not been disclosed, but Mr Gay was happy to talk about his enthusiasm for Darwin.
He said the positive long-term outlook for the city as Australia’s gateway to Asia was the deal clincher for his family, who has previously owned trucking businesses and farms as well as accommodation properties.
“We were looking Australia-wide, but Darwin has the most growth potential because Asia is increasingly Australia’s biggest partner, and Darwin is the gateway to and from Asia.”
Vitina Studio Motel, a 60-room property recently extensively renovated and refurbished, was picked up Chris Banson’s Saltwater Properties, which operates 18 accommodation properties across Australia with 1200 keys.
The experienced operator, who started with one property at Lakes Entrance in Victoria in 2005, says he had been waiting for some time for the right property to come up in Darwin.
“It is still a small market, but a very important city, and I see considerable long-term growth,” Mr Banson said. “Ideally, I would also like to secure another upmarket property in the CBD.”
Resort Brokers Australia says the returns available to accommodation operators far outstrip those available in interstate capitals.
“Returns in Brisbane, for example, are currently around 26 to 26 per cent, while in Darwin and Palmerston you are looking at between 30 and 35 per cent, and Katherine down to Tennant Creek probably 45 per cent.”
Mr Gay said the ease of doing business in Darwin, compared to interstate capitals, was also a breath of fresh air.
“We would certainly buy again here because all the government departments you need to work with are right here and right behind you, and everyone from service providers to government regulators has a really positive, helpful attitude.
“The strong business market, which helps even out the seasonal nature of the tourist market, also really appealed to me,” he said.
“Darwin’s got a lot going for it as the natural hub on the route between Asia and Australia.”
According to both Deloitte Access Economics and Tourism NT, Darwin achieves a very healthy year round average occupancy of 79 per cent, boosted significantly by the peak season (September quarter) rate of 90 per cent.
“The high season is fantastic, but I see the real growth opportunity in the leisure market in the low and shoulder seasons,” Chris Banson said.
Resort Brokers is currently handling the sale of two more major Northern Territory properties – the modern, 84-keyed Quest Palmerston apartment hotel and the Boab Caravan and Cabin Park in Katherine.
The leasehold of Quest Palmerston, a 4.5-star property with conference and resort facilities, is for sale for $5.995 million.
The oasis-like Boab holiday park freehold, on 10,000sq m with a licensed food and gift store, two owners’ units and a pool, is listed for $2 million showing a 22 per cent return.
